Build or save? What do you think?

Hello,
We are an almost four-member family (29, 27, 2 and expected Aug 2015) and since a new development area is currently planned in our village, we are facing the question whether to take the step now or rather save for a few more years...
Currently, we pay €550 cold rent and save €700 monthly in a savings account.
My husband is the sole earner as I am still on parental leave and, yes, the second child is coming soon. Salary should increase well in the next few years since he has only 4 years of professional experience after university.
So far, we have only been able to save €35,000 in equity.
The building plot would cost around €80,000 (including incidental costs).
We would build about 150 m2 with a basement and a double garage. What costs should we roughly expect?
Since we have a 2-year construction obligation and cannot first pay off the building plot calmly, we would have to do the entire financing now and start building next year.
What do you think about this?

Hello,

well, that primarily depends on the household income you have available.

As a rough guideline, you can calculate about EUR 1,500.00 per sqm of living space - that would be a round EUR 225,000 for 150 sqm - but this does not yet include painting and flooring work.

The basement strongly depends on whether sealing is required or whether it is also to be used for residential purposes. You can estimate between EUR 30,000 and EUR 50,000 here.

I estimate the double garage (depending on equipment) at about EUR 10,000 - 18,000.

Then additional construction costs of about EUR 40,000.

Then, including the land, we are between EUR 385,000 and EUR 413,000.

Subtracting equity of EUR 35,000 leaves a financing amount of EUR 350,000 to 378,000.

As another rough guideline, you can expect EUR 500.00 loan rate per EUR 100,000 loan amount.

This would mean a rate of about EUR 1,750 - EUR 1,890 at the above values.

That is a bit more than you are currently spending (EUR 1,250), but it would in any case have to be calculated individually for you.

Regards,

Dirk

Hello,

I think some information is still missing for a well-founded answer, such as where you want to build, how high your income is, and how high your current expenses are.
Also, one should know more about the features of your desired property, e.g. electric shutters, bay window, whether furniture should be financed, etc.

Maybe you could visit a model home park near you to get a feeling for the size, layout, and features of your desired house.

Best regards

Thanks already for your answers! Well, we currently have a net income of 2900€ (from August +2 child benefits) available, but that doesn’t matter because I have been keeping a very detailed household budget for two years now and currently only 700€ are being saved (and we don’t live a luxurious life), nothing more is left at the end of the month. So we would have to pay the loan + new insurances from the 1250€ (+184€)... everything that later comes from salary increases and when I go back to work would have to be used as special repayments. The wish is of course even greater since children are already present and the building area is now being planned! Since we are still young we could pay off over 25/30 years if the special repayments do not work out so well, you never know. As I said, we don’t need many extras when building the house, of course it has to be seen what you get for the loan amount. The kitchen should be financed as well, maybe also one or two pieces of furniture but actually everything else is already there. The decision is very difficult for us, normally you only build once...

In my opinion, you cannot afford that.

However, I wouldn't drive myself crazy over this development area now.

You should not let anyone talk you out of your dream of owning a house here; it is best to go to a local construction company and get advice there, because prices vary significantly depending on the region. And the 500€ per 100,000€ is not necessarily required; Dpc. Schnaggls calculated with 6% (I assume 4% repayment and 2% interest). This way, you finish faster, about 20 years, but you also pay more per month. If you calculate with 2% interest and 2% repayment, it's about 335€ per 100,000€, so it just takes a bit longer, but in your case, 1250€ per month for 350,000€ would work out. So first, I would go to the bank, have them calculate how much you can afford, and then go to the construction company to see how much house you can build for that.